The Shibli Rubayat-Ul Islam-led Securities and Change Commission leveraged its particular authority in 2020 to facilitate Sonali Paper and Board Mills, granting no less than 18 exemptions from regulations, along with the requirement of a minimum paid-up capital of Tk30 crore and the location of getting sure acquire fresh resources for the past three financial years.
In June 2021, its piece mark became as soon as round Tk200, nevertheless internal six months, it soared to Tk955 with none wide unusual knowledge. After issuing rights shares, the worth even reached Tk920. Nonetheless, it step by step nosedived and closed at Tk157.30 on Thursday.
After languishing in the over-the-counter (OTC) market for round 11 years, the paper-basically based completely mostly producer – a area of Younus Neighborhood of Industries – returned to the foremost market of the Dhaka Inventory Change (DSE) in 2020, ignoring its negative overview of the firm’s fundamentals.
A DSE official, searching for anonymity, told The Change Usual that the stock market regulator looked to favour Sonali Paper as if particularly tasked with providing them a probability.
“Following its relisting on the DSE, the firm’s piece mark became as soon as heavily manipulated beneath the Shibli payment’s protection,” he added.
For the length of this period, the BSEC allowed extra than one exemptions from checklist principles, rights piece issuance, and lock-in sessions for directors’ piece gross sales. These exemptions allowed the house owners to withdraw over Tk100 crore from the market, seven times their long-established investment.
Makes an are trying to contact Chairman Mohammed Younus for comment had been unsuccessful. Nonetheless, Md Rashedul Hossain, the firm’s secretary, stated that after 11 years in the OTC market, they efficiently returned to the foremost board in 2020 and are of path complying with regulatory requirements.
Facilitation beneath the Shibli payment
After taking situation of industrial in 2020, Shibli, who quit the BSEC on August 10 days after the descend of the Sheikh Hasina authorities, took steps to handle components in the OTC market, along with facilitating the return of companies savor Sonali Paper to the foremost stock exchanges. Earlier than its relisting, the firm had a paid-up capital of Tk15 crore.
The DSE launched the OTC market in October 2009 with 51 underperforming companies, along with Sonali Paper. The firm had been making an are trying to return to the foremost board since 2011, nevertheless its appeals had been again and again denied by the DSE board because of non-compliance with checklist regulations, basically based completely totally on DSE sources.
At closing, in July 2020, the rate allowed Sonali Paper to return to the foremost board, granting no less than 18 exemptions from principles, along with the requirement for a minimum paid-up capital of Tk30 crore and having sure acquire fresh resources for the closing three financial years.
The firm became as soon as relisted at as soon as on the foremost board, bypassing the IPO path of because of these exemptions. No topic the stock exchanges’ old refusals, the securities regulator allowed the firm to re-enter the foremost market.
Facilitation of rights shares
In April 2022, the Shibli payment granted exemptions to Sonali Paper concerning the issuance of rights shares.
In step with the guidelines, a firm cannot dispute rights shares internal three years of checklist on the foremost board of the stock exchanges, nevertheless Sonali Paper had been relisted most efficient one 300 and sixty five days prior.
In the intervening time, the firm’s paid-up capital became as soon as Tk21.96 crore. With the exemption, Sonali Paper elevated its paid-up capital by issuing rights shares at a ratio of 1R:2 (one rights piece for every two unusual shares) at Tk10 per piece.
Overvaluation of resources
In step with a varied auditor’s valuation, 11.50 acres of land in Rupganj, Narayanganj, became as soon as worth Tk316.25 crore, vastly less than the Tk517.50 crore stated in the FY21 audited financial commentary.
The auditor found that the firm had overstated the land’s worth by Tk201 crore. Additionally, the identical land became as soon as overrated by Tk362 crore in 2016.
The firm, audited by MABS & J Partners for FY20 and FY21, became as soon as found to hold reported false gross sales, inflated valuations and income, and manipulated earnings thru false disclosures.
It moreover diverted loans supposed for uncooked supplies into stock investments, which is believed to be money laundering.
The inflated land worth elevated the firm’s acquire asset worth by 64.7% in FY20 and 63.2% in FY21.
Furthermore, loans of Tk22.50 crore for working capital had been misused for stock market investments, violating anti-money laundering regulations.
Income decline in Jan-Mar quarter
In step with the January to March 2024 tale, the firm incurred a loss of Tk11.88 crore despite generating income of Tk70.05 crore, due to volatile capital market.
The firm reported a loss of Tk15.43 crore due to market slowdown, with a per-piece loss of Tk3.60.
The firm is all for the manufacturing of white, printing, simplex, and duplex papers for the local market.
